confirmation process the concern about markets overheating and long-term zero interest rate policy. maybe the threat on the front end isn't inflation. maybe it is instability in the financial markets. i'm wondering if you've refined any thinking about how you may address that should it occur. >> well, senator, i agree that an environment of low rates, low interest rates, especially when it p prevails for a long time, and we have had a long period of low interest rates can give rise to behavior that poses threats to financial stability. and therefore we need to be looking at that very carefully. and we are doing so in a very thorough way, i believe. there are a number of things that we are monitoring.

measures of asset prices and whether or not they appear to be diverging from historical norms. namely it's hard but trying to spot any asset price bubbles that might be emerging. we're looking at leverage, which build up in leverage can be very dangerous to the financial system and pose stability risks. we're looking at trends in leverage. we're looking at credit growth to see whether or not that has potentially worrisome trends. in addition to that we're looking the particularly through the stress tests at financial institutions and a low interest rate environment. we have to worry about whether or not they're appropriately dealing with interest rate risk ls. we have been looking at that and, in fact, our current stress

test includes a special portion related to -- >> and as you're looking -- and i'm going to run out of time and our chairman is very punctual, have you found anything yet that gives you concern? do you have a tool with the zero interest rate policy to address that if you do? >> i would say at this stage broadly. i don't see concerns. but there are pockets is of a few things that we have identified that do concern us. for example, underwriting standards and leveraged lending clearly appear to be deteriorating. e we have addressed that with supervisory guidance and special exams and will continue to be very vigilant in that area. that's worrisome to us. there are a few areas within asset price evaluations, broadly speaking. i wouldn't worry.

there are a few areas where i would be concerned. many people have emphasized farmland prices. we have regulatory and supervisory tools. to me they should be the first line of defense. but i don't rule out monetary policy. >> just if i could -- thank you very much for that detailed response. we were just in listondon meeti with regulators there. i know there's a concern about balkization in our markets, i know there was some discussion of trying to address that with the trade agreement but i think it's an issue that does need to be addressed, and i realize the fed will take in majorly with that. and the final point, the orderly liquidation entitle was put together and a lot of us worked on together and i'm proud of that title too.

and it's not exactly the way any of us would like for us to be. even though it was orderly liquidation, i think the federal -- fdic realized when they went through the process the entities are so intertwined there's really not a way to totally liquidate. instead coming in single entry to the holding company. one of the things we all have concern about is making sure if we're going to use the process, and i think it's sound personally, that we ensure there's enough debt at the holding company level. otherwise there will be holding distortions. where is that right now, pane when will we come up with a ruling the that gives clarity so we know absolutely we have things in place should a large institution fail? >> so i agree with you that this is extremely important. it is high on our list.

we have been working globally with other regulators and looking ourselves at a requirement that holding companies have a minimum amount of long-term debt that would be loss absorbing. that would permit an orderly liquidation. we would need enough long it have term debt both to absorb losses and also recapitalize a company in the title two liquidation, and we're looking to come at with a rule that would require that we're working with the fdic on this. >> thank you, mr. chairman, i hope it's a very large amount of debt held at the holding company. thank you. >> senator menendez. >> thank you, chairman. let me ask you the number of long term unemployed americans has continued to go down but it's still st exceptionally high

by historical standards. as you know long-term unemployment can permanently impair the growth prospects for our economy if the workers are stuck on the the sidelines for too long and their skills become out of date doch. do you feel that the fed's policies have been successful in helping to reduce the number of long-term unemployed americans? is there anything more that the fed can do, or is there congressional action you feel is necessary in order to meet that challenge? and is boosting demand the best way to reduce long-term unemployment right now bags based on our current economic conditions. >> well, we are very focused on and concerned about the high term level of unemployment. it's really unprecedented the to see something like 37% of unemployed in long spells.

what can we do? we can stri to foster a stronger labor market generally. we don't have tools targeted at long-term unemployment. but i in taking account of how much slack there is in the labor market and attempting to stimulate demand so that there's more spending. there's more production and more jobs in the economy, we have seen long-term unemployment inch down. very slowly. it's taking a long time for those people to be reabsorbed in the labor force. but our approach is to foster a stronger recovery and get the economy back to long-term unemployment and they will see gains. >> so is there anything else that you think the congress, maybe not the fed should do in order to achieve getting those numbers -- historically high numbers down quicker? >> well, i think it's also

appropriate for congress to look at what some of the special needs of long-term unemployed are. these are spells that are very damaging to families, put great burdens on families both in terms of income and even health burdens that -- burdens on children and marriages. i think it's certainly something that congress can look at. is helping individuals with skill sets something we should be considering? >> yes, sometimes long-term unemployed do need to acquire different skill ls norld to be reabsorbed into the job market. >> now i know chairman johnson asked you a question on income and wealth inequality and i want to follow that up in terms of monetary policy decisions. and over the last 20 years the top 1% of earners has grown by

more than 86%. while incomes for the remaining 99% have grown by less than 7%. . and even during our current recovery from the financial crisis the top 1% have received 95% of the income gains over the last three years while real medium income remains 9% below 1999 levels. so of course we all applaud those who achieve financial success and we are thankful for that. but we're concerned that the vast majority of people in our country feel they're not sharing in the economic growth. when widening income and disparity make it harder for ordinary working families to make it up the ladders it creates a greater challenge to our overall economic well being. so my question is, how does the

fed klt for income inequality? for example, the fed is looking at broad statistics like gdp but economic is accruing to a small share of the population p while the rest still feel they're in a recession, recession, is there a broader range of statistics that the fed should be considering? >> well, i think that the trends that you have described in detail are extremely disturbing friends with very significant implications for our country, and i am personally and the fed is very worried about these trends. the major thing that we can do is, as we try to assess the state of the labor market and appropriate policy to look at a broad range of statistics and metrics concerning the labor market. not just the unemployment rate.

but in particular other measures that suggest that the labor market is not functioning properly. the fact that we have seen very slow growth in wanls, for example, i take as one of many pieces of information suggesting the labor market has not returned to normal and has quite a ways to go, and it's something that's appropriate for us to look at as we consider appropriate monetary policy. >> you'll look at la broad range of factors as you are making your decisions? >> absolutely. >> all right. thank you. >> senator vitter? >> thank you, mr. chairman. thank you, madame chair for being here and for your work. as you know, many of us, certainly including senator brand and i, are concerned about capital requirements at the biggest banks.

can you confirm u.s. regulators are close to finalizing the supplement ratio that will impact that and if so when will that take place? >> this is high on the agenda for this coming year. we have out an initial proposal on this. and while i can't give you an exact time, we -- we will certainly be working with the other agencies to finalize this. >> kp you give us a general time frame when you would expect the fed to act? >> in the not too distant future, i would say. >> according to the wall street journal, vice chairman kokoenig said the regulators are unlikely

to trade the draft proposal against all large bank assets and a similar 6% buffer at their ensured deposit taking subsidiaries. in contrast to that, there has been concern that you might follow europe's lead in watering down some other provisions from the initial draft concerning things like a weaker treatment of derivatives and valuation. can you give us any insight into where those things stand in your discussions? >> so, i mean, let me see if i understand what you mean here. when we came out with the proposal for the 5% and 6% -- >> correct. do you think there's any chance that will change in the final action? >> i mean, this is something we've been quite supportive of.

i'm not envisioning -- >> okay. and deeper in the weeds, if you will, there's been some suggestion that you could back off other elements other of the draft. do you think that is any possibility? i would hope not. i think others on the panel would hope not. i would encourage you to not weaken any elements of your draft. is that under discussion? >> i'm not aware if it is under discussion. i would have to look into that. but my objective would be to come out with a strong proposal. we have increased greatly risk based capital requirements in light of that increase. i see leverage in this base. capital is built in suspenders. it is definitely, in my view, appropriate to increase leverage

requirements. more or less in line with risk based capital requirements. >> i will just encourage a strong final set of rules as strong or stronger than the draft. i would just encourage that. let me move to one other topic i wanted to hit. and this is actually related to this too big to fail issue, which capital requirements are also about. a lot of us have a concern about the squeeze that community banks are getting in financial sector. that has been a historic long-term friend. it's gotten even a lot worse since the '07-'08 crisis and since, and i would argue in some cases, dodd-frank. so it's going from bad to worse in terms of a the trend. if you look at federal reserve

board membership, there's also a trend. and it's away from representation of community banking supervision experience. and this shows it's a little busy. it's color coated. this shows the makeup of federal reserve board members over time. and there's been a huge growth over time in terms of folks with a pure economic and academic background. in particular right now there's one person with that sort of community bank or community bank supervision experience, and she is leaving. so soon there will be none. what will your thoughts be about a requirement to have at least

one person in the future with that type of community bank or community bank supervision experience? >> so i've had the privilege of working with governor rasken and previously governor duke. i can certainly say they made huge contributions in the community banking area and the background that they were able to bring was extremely helpful to us in crafting regulations and approaching our ooup vision responsibilities with sensitivity to the issues the banks face. i hope the administration will continue an appointment with someone with that kind t type of experience. f i can certainly attest it's very helpful for us in doing our work. >> thank you. thank you, madame chair. >> thank you.

ma d madame chair, thank you. we're thrilled you're here. i thank senator vitter for his comments and questions about capital standards. i appreciated your answer. i urge you as quickly as possible with occ and fdic to move as quickly as possible. thank you for your response to me at the real economy in your confirmation hearing. last friday as the board released transcripts of the fmoc meetings the reading buzz interesting for those of us that find this stuff interesting. and they are maximizing employment. but according to "the new york time times", that's september the crucial, probably most important of those in september meeting fmoc members mentioned, according to the minutes inflation, # 129 times. and recession five times.

you speak forcefully and have about the threats to the broader economy. this implies that the institution overlooked what was happening on main street during this critical time. now that your chair convinced us that we won't see meetings like that, where the emphasis the is so much more on inflation than full employment. because the focus will be on ordinary american who is bear the brunt of this economy. >> well, i think as you know, the feds take the mandate very seriously. and believe we should be focused on inflation and unemployment. but to put the 2008 situation in context. if you think of what happened this months of that meeting where perhaps people didn't

realize how serious it was about to get. within days or months of that meeting the most incredible arrays of programs had been ruled out by the federal reserve to address deteriorating conditions. an alphabet soup to report the credit throughout the economy, to provide liquidity, not only to banking organizations, but to markets that were really finding themselves deprived of it. and by december of 2008, even with all the mentions of inflation that you noted. the fmoc had certainly changed its focus, and in december lowered the federal funds raise to zero.

so i think i was one of those who was urging more, faster, we need to get on this, but within flooents a great deal had been done. since then we have been trying to do it. and so in some sense i think the fed has responded. >> and you, i mean, to your credit you look better in those minutes than some of your colleagues did. that's the past. you look to the future. i want to follow up on the too big to fail questions. in november you said addressing too big to fail is among the most important goals of the post crisis period. you mentioned the resolution authority, long-term debt requirements, supplemental ratio. you have living wills and the authorities to break up institutions if they pose a grave threat to this the financial system. your once fellow governor dan turillo said on tuesday that

we're, quote, not even close, unquote, to ending too big to fail. do you have the tools as the new fed chair? why is it taking so long, and when is this going to be resolved? se when will the american people know that too big to fail has actually ended? >> well, i'm slightly surprised he said we're nowhere close. i personally think we've mad a lot of progress in putting in place regulations that will make a huge difference to this. even in orderly resolution, i think it's important we were just discussing the long-term debt requirement. there are very thorn any obstacles to resolving a failing firm having to do, for example, with cross border resolution issues. how to deal with the fact that

laws in foreign countries could make it impossible, you know, could precipitate the ending of contracts that would cause a disorderly failure. but we're working very closely where the counter parts to try to resolve these issues, and you gave a list of all the things or some of the things that we have on the drawing board that we're hoping to finalize within months or during this year. beyond that we're working on shadow banking. our stress test capital in the banking system. the highest quality capital has doubled since the crisis and i personally think we are making strides. . and i'm completely committed to seeing this agenda to fruition. and i'm more encouraged about the progress that we are making, and i'm committed to completing this. >> thank you. one last comment, there chair.

i apologize. i think that the quick accelerating the rules on occ without diluting those rules is really important, not just substantive thing to do, but really important message to the public that you really do mean it and you mean business on this and you really want to end too big to fail. thank you. >> thank you. i agree with you. >> madame chair, thank you for being here. thank you for listening, being patient and taking our questions. i know as a former chair for the san francisco federal reserve you have a pretty good understanding of the state of nevada and the the current economic conditions. it's been over five years now since we've had this economic collapse, and i want to take a quote from the president of the st. louis reserve that said we're a lot closer to a normal economy than we've been in a

long time. and i would stress and i can tell you right now, nevada is nowhere close to a normal economy. nevada is still at the unemployment second highest in the nation. and many homeowners are still underwater. is this the federal reserve or a new economic reality? >> well, as you know senator nov tar -- nevada was one of the hardest hit. one of the biggest boom ls in housing and about the the biggest bust of any market in the country and i'm well aware an unusually large share of

homeowners is underwater. the recovery -- you know, the prices have come up. and they're coming up in a way most rapidly in some of the areas like las vegas where it's the most. it's still a long way ls before they're back in the housing market. prices are moving back up. we see investors coming in and buying homes and converting them to rental housing. credit is really hard for many families to get the ability to have home equity loans when it's been wiped out. unfortunately nevada is one of the states that's been most badly affected. >> any time frame for that new normal? or a normal economy?

>> several years i think. >> several years. can you give me your definition of full employment? >> to me it's the state of the job market in which people are able to find jobs for which they're qualified, and there's no single metric to say when we've reached that. i would look at a broad range of indicator ls of the labor market. the unemployment rate, if i had to choose one metric, the unemployment rate is best. they generally see a range of 5% to 6% or a little bit -- in that area to be a state of full

unemployment in the economy. but also job flows, what's happening is necessary. >> what is real unemployment today? >> some of the broadest measures of unemployment, like u6, which includes margely attached workers and those who are part time for economic reasons or can't find full work, around 13%. >> 13 bank accouthe congression office reported president obama's proposal to raise minimum wage would add half a million jobs. some believe they're lowballing the figure. i know it's your job at the fed to maximize unemployment. i would like to hear your

thoughts. >> i think all economists think it has two effects. one is to give higher wages to those who continue to have jobs and work, earning the minimum wage. and second there would be some amount of employment as a consequence, and there's considerable debates about just what the employment impact will be. cbo is as qualified as anyone to evaluate that literature and i wouldn't argue with their assessment. i mean, there are a rapg of studies, and they cited them. but i wouldn't want to argue they're good at this evaluation and if apined on this, i think they also -- i can't remember the numbers involved, but indicate that had a large number of individuals would see their incomes raised as a consequence,

i think that's the tradeoff. >> doctor, thank you. my time has run out. thank you, miss chairman. >> senator tester? >> thank you, mr. chairman. i want to welcome chair yellen. thank you for putting yourself forward and congratulations on a historic confirmation. we were able to visit about a number of issues. we're going to visit about them again. end users are one of the issues we discussed. clarifying the end user exemption from the margin that was included in dodd frank. and as you know, we have visited chairman bernanke, your predecessor and governor trullo. both indicated comforted with the intent of the extension given the lack of systemic risk posed by users. by concern about the fed to achieve that intent. since 2011 there's been a number of additional developments

including the finalization of the framework in september, setting for forth margin standards. can you share with us where the feds' thinking stands on this issue in light of those developments? >> so the fed continues to think that end users do not pose systemic risks and we will come back and we'll be crafting a rule in light of the international negotiations, and i believe that we will do our very best to plak sure that there are no undue burdens poses on end user who is do not pose systemic risk. >> i thank you for that. i know your plate is full and there's many issues you're dealing with every day and people are always asking you when is it going to come ut out. so i'll do it? when is the timing on that front? >> i'm not -- i can't give you a date certain. >> before the end of the year?

>> i believe so. >> okay. the chairman talked about bans s as your regulatory policies and the final rule released last week, the fed declined to apply the rule to nonbank financial companies. it indicated a desire to tailor the rules. but can you tell me more about what the fed has in mind with respect to the tailoring. >> so we understand that the business models of insurance companies are quiet different than those of banks. there are a number of ways that asset liability matching, separate accounts, and so forth that require tailored design of capital and liquidity requirements so they're appropriate to those business models, and we're trying to take the time that's necessary to

understand in detail the businesses of these companies and what is appropriate. i would say again, though, we do have some constraints in what we're able to do. >> could you give me some insight into what extent might the tailoring with respect to this rule, provide a road map for how the fed might seek to tailor other rule makings? >> i mean, i believe we in general try to tailor our rule makings -- i'm not sure what area in particular you have in mind. >> with insurers in particular, but others too, if you mind. >> pi mean, generally we try to tailor our rules so that they don't pose undue burdens on companies that are not really the -- you know, don't pose

risks to is system. i would say in the case of community banks well, i know community banks are under many burdens and it's not easy to run a community bank. if our part, we are trying to avoid burdening community banks with the same level of regulatory complexity that we would impose on a systemically important institution and the same is true in other areas where we have the ability to tailor rules to make them appropriate. >> thank you. in regard to international insurance regulation i just want to say how much i appreciate the fed moving in the direction that you spoke of earlier. i very much look forward to working with you to ensure we don't force ensurers into a bank centric regulatory model. i also want to know how important the sentiment is that the fed is heading in terms of regulating insurers is fully

reflected at any international regulations regarding capital standards that you may be a part of in your capacity as a member of the stability board. i want to thank you for your good work. as have already expressed we were very impressed with your work and look forward to getting you in the future. >> senator toomey. >> thank you, mr. chairman. madame chairman, thank you very much for being here. welcome on the the first visit in your new role. >> thank you. >> you know, i've been very concerned about this, our monetary policy for some time. i wonder if you could, for the committee, give us a sense of how you would quantify the benefits that the economy has enjoyed, assuming you believe there are benefits, from this unprecedented environment that we've been engaged in. a lot of reputable economists look at traditionally understood mechanism to be asset priced inflation, translating to more

spending and the quantification of that gives some very, very modest numbers. i want to know how you get the benefits for the easing that we've had. >> so i don't have a quantitative estimate that i can present to you today. there are a range of estimates in literature. you know, we hit the so-called zero in december of 2008. we lowered the feds overnight interest rate target to zero. standard rules like the taylor rule would have called for more accommodation. rules like that is said we should go to 4 or 500 basis points if we could. and we could not. and so we looked for other ways to provide the accommodation. ch so asset purchases and forward guidance.

i think thefz served the to push down interest rates. o we have seen some significant recovery in housing. the backup in rates we have seen last spring and summer clearly seems to have had a negative impact on housing, and so i think it's fair to say that we were successful in pushing down longer-term rates in terms of these policies. we did see a positive response in housing. i think in the area of vehicle sales, interest sensitive spending -- >> i don't mean to -- i just have such limited time. so i'm aware of the changing in economic statistics, but the point is you don't have a quantification for how much of that is attributable to the quantitative easing. >> there are estimates of a number -- >> but there's not one that you've endorsed or that you

subscribe to? >> i have cited some. and i provide details on some that i've cited. >> and on the risk side of this equation, i know you mentioned the things you're looking for. many people believe that last decade the unusual monetary policy, including maintaining negative real interest rates for an extended period of time contribute ed significantly to e housing bubble that later burst, of course. do you agree that that was an attributing factor and secondly, among the risks that you look as as we hopefully move to normalcy, which ones concern you the most? and then i have one last really short question? >> so i think it will take a while for scholars to decide exactly what role easing monetary policy had in contributing to the financial crisis.

i would not argue the idea that a long period of low interest rates does contribute to the buildup of leverage and may have touched up a housing bubble. i think on the regulatory side. on the supervision side, there were also failings that contributed importantly to the crisis. we're watching very carefully for the development of any such excesses. we are very focused on not allowing such a thing to happen again. and twhil in might be a few areas where i have concerns, such as deteriorating underwriting standards and leverage lending, farmland prices, a few things, i don't see those excesses having developed at this point. wrpt to housing prices, they have rebounded significantly,

but remain not back to their peak levels by any means and price ratios and housing certainly remain in normal ranges. and so i don't think we've promoted those kinds of excesses. certainly not at this stage. >> thank you. my last question. you stressed a couple of times the importance that you attach to fulfilling the congressional legislative mandate to maximize employment. as well as the other portions of the mandate. my question is would the bhafr of the fed, would the actions and the policy of the fed by any different if the fed had only a single mandate, and that were price stability? >> so over this last several years i think the answer is no. because at the the moment -- >> how about today? >> well, inflation is running well below our objective.

and the economy is falling short of unemployment. so both pieces of the mandate are giving us the identical signal. mainly we need an a policy. there can be situations where there could be conflicts between the objectives. and in that sense, it would make a difference. it might make a difference to have a dual mandate rather than a single mandate. at the moment there is no such conflict. my personal view is this mandate has served as quite well, and most central banks even if they have an inflation target also have a mandate to take account of economic growth. >> although the ecb does. >> that is true. >> thank you very much, mr. chairman. >> senator, egin? >> thank you, mr. chairman. welcome to the committee. i was so pleased at the beginning of the hearing to hear chairman johnson's introduction

and welcome to you as the first woman to head up the federal reserve. so welcome. >> thank you so much. my first question is during the january of 2014 federal open market committee meeting, the committee authorized the federal reserve bank of new york to conduct a series of fixed rate overnight reverse repurpose operations involving securities and securities guaranteed by agencies of the united stateses. the authorization runs through january 30th of next year of 2015. and specifies an offering rate of 0 to 5 basis points that you have the authority to waive. the program, which has been steadily extended and expanded is being considered for use in supporting the implementation of monetary policy. so i want to ask you some questions about this. can you begin by describing this program? its scale, and then your vision for its expanded use, and also

if you can talk about the dollar volume of these operations. >> so this fixed rate overnight reverse, repurchase facility is one where we're essentially borrowing from nonbanking from entities other than banking organizations. we're offering the to pay a low, fixed rate and are offering our counterparties in return for their loans to us, collateral which comes -- comes in the form either of treasury or agency mortgage backed securities. and we're engaging in this program. as you mentioned, this is something technical. but we want to be table to

firmly control short-term money market rates when the time ultimately comes, which it's not. it's probably ha long way off, but when the time comes we do wangt to tighten monetary policy and raise our target for short-term interest rates. we would like to be able to execute that in a very smooth way so that we have good control over the level of short-term interest rates. and the paying interest on reserves, that's something that is one tool we will be using to boost when the time comes, the level of short-term rates. but using this new facility can also help us gain better control, i think, than we could through interest on reserves alone. so at the moment we have been experiencing with developing this facility, making sure we

can smoothly execute these transactions with a range of potential lenders. we have put limits both on the magnitude of loans that we will be willing to take on, and what we're paying, as you mentioned, the limit so far has been five basis points. we're pleetzed by what we're seeing about our ability to carry out the exercises and it's part of prudent planning that the fed has been doing for quite some time. >> and what about the dollar volume? >> it varies from day-to-day depending on how much interest there is in the markets. it's up to the markets to decide. we've typically had limits on the amount that any one firm we lend to us overnight. >> it was 3 billion. now it's up to 5 billion? >> yeah. i think there were days at the

end of the year given the pressures that existed toward the end of the year when i believe the volume rose to 30 or 40 billion. but i can get you exact details on the quantities if you would like further information. >> what tr the monetary policy effects of raising this offer rate beyond other range set than the fmoc's rez ligs? >> well, these are very, very low rates. >> right. >> and so we're not raising rates by doing this. we're only going up to five basis points. we're paying 25 basis points on interest on reserves and there's really only any takeup at times when there would be, you know, pressure for unusual reasons for rates to fall to below that. but we're not pushing up the general level of short-term rates with this facility at this time. >> my time has run out. thank you very much. >> senator manchin.

>> thank you very much. congratulations, madame chairwoman. i'm so pleased i was able to vote for you. and we had nice conversations concerning the quantitative easing. i appreciate the job you're doing. >> thank you. >> let me say i sent you along with five other regulators a letter representing my concerns of bit coin. i think it's being used for illegal activities. it allows scam artists and hackers to steal money from hard working americans and it's a bad form of currency because it has a deflation problem. . most recently the major change for bit coin went dark, which led to $400 million in bit coin's evaporation overnight. i'm concerned other countries are ahead of the curve of already issuing regulations to protect their citizens, which may lead americans holding them back. i would like to know your view on the bitcoin and what actions does the fed have planned on

regulating this unstable currency? >> so, senator, i think it's important to understand that this this is a payment innovation that's taking place entirely outside the banking industry. and to the best of my knowledge, there's no intersection at all, in any way, between bitcoin and banks that the federal reserve has the ability to supervise and regulate. so the federal reserve simply does not have authority to supervise or regulate bit coin in any way. i think my understanding is that fence and the department of justice have -- i mean, one concern here with bit coin is the potential for money laundering. i think they have indicated that their money laundering statutes

are adequate to meet their own enforcement needs. but it certainly is appropriate. so the fed doesn't have authority with respect to bit coin. but it certainly would be appropriate, i think, for congress to ask questions about what the right legal structure would be for, you know, virtual currencies that will involved nontraditional players that aren't regulated. >> let me just say, and i'm so sorry, you know how our time is around here. if there's a new american exchange for bit coins, they're going to use banks. if this exchange is using banks you all will have. >> if they use banks. my understanding is the bit coin doesn't touch banks. >> why did other countries belief they that had to get involved? >> well, you could get involved if congress wants to get involved and set up a

supervisory regime. it's not so easy to regulate bit coin because there's no central issuer or network operator to regulate. >> what we'll do is i think probably if we can, further explore this and get recommendations and see what our ramifications would be. >> sure. and we would be happy to work with you. we're looking at this and will be glad to talk with you. >> my other concern is community banks. a new study released this morning show that dodd-frank is having a negative impact on community banks. just came out this morning. most community banks have had to hire at least one additional compliance officers and many have had to hire two. it doesn't seem like much. but former fed governor iz beth duke who i know you know very well has said hiring one additional employee would reduce the return on assets by 23 basis points for many small banks, and

in other words, 13% of banks with assets of less than $50 million would go from profitable to unprofitable. which is very concerning. and in west virginia the community bank is our life blood. and it's really caused a problem here. so based oen the new study 13% of banks may be unprofitable simply because they had to hire that new compliance officer to deal with the burdensome dodd-frank. what can the banks do to protect the banks other than asking us to do our job? >> so we have tried in all of our rule makings to tailor regulations so that changes that are really meant to reduce systemic risks, that these banks don't contribute to, that we're not burdening them. i mean, we have thought it appropriate that even community banks have

appropriate capital and appropriate quality of capital and so there have been some new standards that have applied to community banks, but what i can pledge is that we will, in all of our rule makings, do our very best to minimize burden on community banks and listen very carefully through the contact of the community banks to understand what the burdens are and to minimize them. >> that report just came out and my time is up. i have more questions i will submit for the record and one thing i would like to say i hope you will consider. yesterday it was reported that china central bank engineered the country's currency which is another violation of currency.

i'll submit. thank you. >> it is good to see you. back at your confirmation hearing you said you thought the regulatory responsibilities were as important as the monetary policy and responsibilities, and i agree. but i think current fed practices don't reflect those values. so while the feds board of governors votes on every important monetary policy decision, the board rarely votes on issues like whether to settle enforcement actions. last year the fed reached its largest settlement in history, $9.3 billion with mortgage servicers affecting more than 4 million families but it was the fed staff that worked out that arrangement and the fed board didn't even vote on it. so two weeks ago congressman

cummings and i sent a letter to you recommending that the fed change its rules so the board would have to vote before any major settlement. do you support such a change? >> senator i think you have raised very important questions about this and i do think it is appropriate for us to make changes and i fully expect that we will. >> so in principal support what we've asked for in this letter that is clear and concrete evidence that the board is supervisory and regulatory policy? >> it is completely appropriate for the board to be fully involved in important decisions -- >> and voting is a good way to do that. >> and i fully intend to make sure that we are. >> thank you. thank you. now i want to ask about another aspect of the mortgage settlement. when the deal was struck, the fed had a big press release to

announce a $9.3 billion settlement but it turned out that of the $9.3 billion, $5.7 billion was in the form of credits for what the fed described in the press release as, quote, assistance to borrowers such as loan modification and forgiveness of suppressency judgments and it didn't say how the credits will be calculated and later it came to light that mortgage companies could get away with only paying a fraction of the $5.7 billion. now the fine print in this settlement could reduce the direct relief to borrowers by literally billions of dollars. so senator coburn and i introduced a bill, truth and settlements act that would require every agency to publicly disclose their settlement agreements including the method

of calculating the agreements and whether it is tax deductible and so on and the disclosure would be required up front at the time this is announced. now the fed doesn't have to wait for congress to do that, you could voluntarily adopt that public disclosure now. will you do that? >> i agree with you, it is important for us to disclose more and to disclose as much as we can. and we'll look at that very carefully and try to provide for mfgs. >> so in principal we're talking about more disclosure here. >> correct. >> i think this is really important because this is about accountability. we want to hold our financial institutions accountable but it means accountability for our regulatory -- >> i agree. >> and i want to follow up onp senator brown's question about too big to fail.

you said we have made significant progress but much work remains to be done and i agree. but since the financial crisis in 2008, the five largest financial institutions are 38% larger than they were back then. so my question is, what evidence would you need to see before you could declare with confidence that too big to fail has ended? >> so i'm not positive that we can declare with confidence that too big to fail has ended until it is tested in some way. i mean i do believe that there are demonstrable improvements in the amount of capital and liquidity that we have put in place through stress testing and dod frank testing and there is

more to come in surcharges and there is a whole agenda here of minimum debt requirements. i think it is important to feel that we have solved to big to fail and that we have the confidence if an institution were to get in trouble that we could actually resolve that institution. >> and i'm over time so i will quit mr. chairman, he is strict with us. but i want to draw in on this a little bit. so long as the markets believe that too big to fail has not ended and they demonstrate that by reducing capital costs for the banks that are perceived to be those the government would rescue, do we still have a too big to fail problem? >> the markets may think we would rescue such an institution and not end up believing us until we put it through resolution so we can't guarantee that they have an appropriate view of how we are going to

handle such a situation. but i do think it is appropriate to look at estimatesch s-- estimates of subsidies and what progress we are making. i don't think it is definitive but it is appropriate to keep track of those market metrics and we see that rating agencies are changing their methodology, diminishing the amount of their estimates of the amount of support that would be forthcoming and i think as we complete our work on orderly liquidation, putting in place minimum debt requirements and working with foreign supervisors to feel we could effect an ordererly liquidation if it came to it that estimate of market sub suddenies -- subsidy would come down. >> thank you very much. and i look forward to talking

about that more. >> thank you. >> you are in the home stretch: senator brown has raised this but i came at this at a different perspective. if you go through the tools that dod frank gave you that might help make the case is in -- in your blessing of the resolution plans, as you are, i know, well aware, you have the ability if there is an institution that such a behemoth that it has tebtsicles everywhere could not be put through orderly resolution, you have the ability to use that power to disentangle or take away part of that institution which might be a great signal because i think there are -- i don't want to say this with sherrod not in the room, but he continues to make a

point that it would hate for us to wait until we have the moment of crisis to fully feel whether we fully got it right. i think showing strong evidence along the path, because i do think you have -- i've been concerned about arbitrary asset caps, and you have tools that you could use in advance of a crisis might make some of us more assured. one edit oriole comment. second edit oriole comment. and following up on what senator manchin said, i think we felt strongly as we went through dod frank but putting the $10 million cap on the regulations that didn't fall below on the smaller institutions, i think it was good in theory, the challenges has been as best practices get built into the regular mindset even though there may not be a legal

requirement for additional regulatory obligations for the smaller institutions, i think it has become kind of best practice model. so i know earlier on when sheila bayer was head of the fdic, there were job owning efforts and others and i would encourage you and your colleagues at fdic and other regulators, this is the fastest growing area in the finance industry and that should be a concern and in some institutions it needs to be and in some of the smaller institutions it -- we are affecting the market in a way, at least from this standpoint, was not what we hoped to do in putting our smaller banks as such -- at such a disadvantage and there may be ways in regard to regulation and part of it may be just a mindset that you could

come back to. my time is going quickly. let me just ask two questions totally unregulated so i can get them out before the chairman gavels me out. one is, and i know you have been hit on every subject and these are going to be completely -- maybe not out of leftfield. but student debt now, a trillion dollars north of our credit card debt and i feel this may be the next looming financial crisis and ideas on how we get about it. part of that has been is because of decreasing direct federal and state assistance to higher education and we made this addiction to debt amongst our students. i would like a comment on that and then also i would like a comment on an issue that i've raised before and i know you have not -- you felt i perhaps

overstated but with our financial institutions have $2.4 trillion in reserve deposited at the fed and i know that 25% interest rate that you pay isn't that much. but when you have other central banks like denmark which is negative and has pushed the institutions to get the money lent out which might asuede senator shelby if the banks were going more to stimulate and get that capital out into the market place. i hope you'll comment on the excess reserves. thank you very much. and i got that all out with seconds left. >> so clearly the student get the standing volume of government supplied student debt has escalated. on the one hand i think it is a

good thing because there are these huge deferentials between what more and less educated people earn and we want people to have access to education to be able to improve their skills. but on the other hand, it may be that sometimes they don't quite know what they are buying and what the education that they may be acquiring -- it is important for them to understand what are the placement rates and job experiences of the schools that they are paying to go to. it is not obvious that that is always readily available. and then again because student debt is something that you can't get rid of in bankruptcy, individuals who take it on can really be faced with very substantial burdens if they ep counter -- encounter financial difficulties and that is really of some concern. on the interest on reserves, i recognize the argument you are

making. i think that lowering that rate would have very limited -- it goes in the right direction but would have a very limited effect on bank lending. we have worried about what impact it would have on money markets that we operate in and not wanting to disrupt -- completely disrupt money market activities. it is something we have considered and could consider going forward. but there are conflicting things that are going on there. >> senator merkel. >> thank you very much mr. chair and thank you for your testimony before our committee. i want to focus on a report that was released yesterday by senators carl levin and john mccain, a bipartisan report that chronicles how credit swiss helped wealthy americans evade taxes by stashing their money in

swiss banks and highlighted flagrant abuses where employees of the bank came to seek clients at golf events and saying they were here for tourism. and set up rooms at airports and destroyed account statements that were being reviewed. billions of dollars of u.s. tax dollars were dodged and it is doing business in the u.s. under the supervision of the u.s. forward reserve board. this report very thoroughly researched, and it is critical of our own department of justice for failing to prosecute a bank operating in the u.s. the senator pointed out, if the swiss bank doesn't want to or comply with u.s. law maybe it shouldn't do business in the u.s. this case has reminders or echoes of the hsbc base we saw

just a year ago, flagrant violations through transactions to keep u.s. officials out of the loop and once discovered an unwillingness by the bank regulators and the d.o.j. to held anybody -- hold anyone accountable. and senators levin and john mccain asked the ceo to admit yesterday and he did admit to, not one person was fired for flagrant willful violations of u.s. law from the ceo on down. it is the same story for hsbc and any other banks that were involved in predatory transactions that hurt american citizens. so i guess my question is this: we have a situation where the government refused -- and this is the government of switzerland, refused and blocked the identification of the folks who were stashing their money in switzerland, we're talking about

22,000 u.s. customers with swiss accounts of which less than or about 1%, the names were shared with the u.s. if they are not going to share the names for these illegal activities, should the forward reserve board be using its regulatory power to say if you can't play by the rules, you can't bank in the u.s.? >> well, you know, certainly in our work with institutions it issin couple bent to make sure they comply with the law and when there are violations of the law we will refer it and have referred it and will refer it to the department of justice if there is criminal behavior that is involved. and the department of justice should be pursuing that and i think that the behavior that senator levin uncovered with respect to this institution is

both illegal and highly unacceptable and it should be pursued. >> so certainly a criminal action being referred to the department of justice is appropriate. but you also have powers. you have powers for how banks operate in the u.s. that are separate and independent of the department of justice. should the federal reserve being used -- these powers in reaction to this type of criminal behavior? >> well our obligation has to do with safety and soundness, and to the extent that these practices are illegal and we have an institution that is discovered not to be complying with the law, we have -- we have an obligation to act to make sure that it comes into compliance. and if we dedekt behavior -- detect behavior that is criminal it is our obligation to refer that to the justice department for prosecution.

>> so one of the powers you have directly is to remove executive of banks when they misbehave and is it your intention to pursue this situation and to explore whether that type of action is appropriate in this situation? >> i will discuss with my colleagues what is appropriate. i don't have a definitive answer for you. >> thank you very much for pursuing that, i'll certainly want to follow up with you because when we are talking over a billion dollars of tax evasion and of 22,000 americans engaged, we can't even get more than 1% of the names of folks and yet it is up to our regulatory agencies to decide whether and how a bank participates in the u.s. economy. and if we are holding u.s. banks to one standard and letting foreign banks operating by a completely different standard, that's a fundamental unfairness and it is also an unfairness to

ordinary americans. if ordinary americans are engaged in tax evasion, they can serve a lot of years in jail. in this case we are talking massive facilitation of tax evasion by a bank now well documented by mccain and levin and it seems there should be some accountable and -- accountability and my folks at town hall say why is this, the hsbc, they facilitated terrorist and drug networks and violated sanctions important to us, to prevent iran from obtaining nuclear items and this is another chapter and new opportunity to change the story of fundamental justice and fairness and i would just ask that you tack a very serious look at it. >> i will.

thank you. >> senator shelby has a brief point to make. >> madam chair, thank you very much for sticking around with us. i pose, is the fed inconsistent. let me explain. on one hand there are gs securities on the face value and under the other hand under sg -- i mean under [ inaudible ] regulation is asking financial institutions and our banks that hold the same gse backed securities that the fed has to take a 15% hair cut when risk weighting such aspects for basil three calculations is my understanding of what is going on and in the approach by the fed to its own portfolio as

opposed to the portfolio of the banks that it regulates, it looks like on monetary policy you have one thing, your own stuff, and then the banks who hold about 40% of gse's prudential regulations looking a different way. >> well, senator, you mean they have capital requirements? >> that is right. that is exactly right. liquidity. they call it new liquidity recovery under the baz ill three. >> why would the fed have a liquidity? >> the banks. go ahead. >> you mention we carry these on our balance sheet at face value. that is an accounting convention that we use in fed accounting. we also report when there are price fluctuations for these securities. we report that in our financial

account so the market value of these securities is -- >> i understand that. but at the same time aren't you on one hand treating -- as a regulator, your banks say they have to take a 15% hair cut on gse holdings and the fed is different. i know you do different things. the approach should be consistent or should it not? >> i mean we want to make sure in the liquidity coverage ratio that banks have adequate liquid assets to be able to meet potential withdrawals that they can face over a period of about a month. >> sure. >> and while mortgage backed securities are assets that can be sold, they are somewhat less liquid than treasuries and the most liquid and cash, and so in computing this we put on place a

15% hair cut. but to say that the same requirement should apply to the fed, i'm confused about that because we don't have the possibility of having runs on the forward reserve. >> ma'am, i was raising the inconsistency in the approach. is there an inconsistent approach or do you say one is good for the banks and the fed doesn't need that? is that what you are saying? >> i believe that the fed doesn't need that and we are not in this area of liquidity in the need to maintain liquidity that the forward reserve is quite different than an ordinary commercial bank. we are not subject to liquidity runs. and to me, it is different. >> but in the same -- you are treating securities differently. you are treating the gse backed

securities in a different way -- you are basically weighing a hair cut of 15% discount of a value of those securities, is that correct? >> well because we think they are somewhat less liquid than, say, treasuries and because they are somewhat less liquid the markets in which they trade, there needs to be some hair cut that they aren't quite as good as cash or treasuries in terms of meeting potential runs on a bank or liquidity drains and to me that is an prooptd recognition -- appropriate recognition in the difference of liquidity between mortgage backed securities and treasuries or cash. >> 15% is a pretty good number though, isn't it? >> it is something.

>> does it seem like a high number. is that an arbitrary number that has been brought forth to risk weight something at a discount of 15%? >> there are judgments that have been made throughout about what the appropriate rates of discount -- >> a lot of the smaller banks are concerned about this because they have bought a lot of gse securities and if they are going to be risk weighted adversely in their portfolio, it could cause them a problem, as you well know. >> so we put this proposal out for comment and we will certainly look at all of the comments. >> well look at it closely is all i'm saying. >> we will look at all of the comments that come in and try to take that into account as we craft a final proposal. >> thank you, mr. chairman. >> chairman yellen, i want to thank you for your excellent testimony. this hearing is adjourned.

>> republican senator bob corker said today that he is worried that russia will use the political insnablet ukraine as an excuse to invade the former soviet republic. that is next on c-span. then vice president joe bind spoke to a democratic party meeting. and then a report on human rights in syria. on the next "washington journal," elizabeth grieco will join us.

they will talk about recent population trends for noncitizens under the age of 35. we'll also take your phone calls on the nutrition initiative. you can join the conversation on facebook and twitter. "washington journal" live each morning at 7:00 eastern on -span. >> is this a technique that you hope will prove fruitful in fundraising? >> it had less to do with his hollywood roots per se. it did have something to do with the skills and the grace he acquired as an actor. he always hit his mark. so he looked like -- he made

sort of being out there, fielding those questions look effortless, which is another aspect of glamour. so people who were likely to support him politically could see in him, you know, sort of the ideal represent representation of theirs. he didn't -- -- their views. he didn't wait for them to fail. as he got older, that became more of an issue. specially in the early days. there was a 16th century book about how to be a successful politician, the politician of the day. a successful courier. >> sunday night at 8:00 on c-span's "q & a."

>> now tennessee senator bob corker talked to reporters about the situation in ukraine. senator corker spoke at an event hosted by the christian science monitor. i'm dave cook from the monitor. thanks for coming. yesterday senator bob corker ranking member from the senate foreign relations committee and influential member of the banking committee. this is his first visit with our breakfast group and we thank them for coming. senator corker i is a south carolina native who grew up in chattanooga and graduated from university of tennessee with a degree in industrial management. he starts his own construction company which grew rapidly in which he sold before turning 40.

in 1994, our guest ran for the senate, finishing second in the republican primary to bill frist. later that year his name tennessee's commissioner of finance and administration. in 2001 he was elected mayor of chattanooga and in 2006 he was elected to the senate and winning handily in 2012 with almost 65% of the vote. that's the biographical portion from now on to the mechanical details. as always we are on the record here. please no live blogging or tweeting or other means of filing while the breakfast is underway. there's no embargo, when the session ends except that a friend to c-span agreed not to air video of the session until one hour after the breakfast inns to give reporters in the room time to file their in depth tweet. finally, if you'd like to ask a question, send me a subtle, nonthreatening signal and i'll do my best to call on one and all in the timely. i will start out by offering because to make some opening comments and then we will move

to questions from around the table. with that, thanks again. appreciate it. >> thank all of you for coming and i want to start by telling to that i apologize for taking so long to be a. i know we had scheduled a number of times, and both ended up happening and other things, but actually relish the opportunity to talk his way to so many people and to have questions asked that may be of interest, so thank you providing the opportunity. i'm only going to give just a small amount of opening comments. i've been here seven years, and you know, having come from the kind of background out again from, it's been an interesting experience. and i've found that really in so many ways, a u.s. senator can make a difference without actually passing legislation. and that's what we had hoped and have done i think in several occasions. one of the things that i think

about often is when this time and, being back involved in my community that i love so much, and hopefully at some point in time being back involved in the business arena that it came from. but that's what i'm leading up to now, and that is, i've been very involved for years in chattanooga and love the business career that ahead, the ability because of some success there to be involved cynically and things that mattered, and ended up pursuing something. i thought a lot of people in chattanooga didn't have decent housing when it was a young man and felt like that was something i could do something about. so i led an initiative that ended up over time helping about 10,000 families there to have decent affordable housing. again, it's about community interests that ended up bringing me to the united states senate. we have something really important happening in our community over the last several weeks.

when i was mayor of chattanooga, which iran from a really as a civic endeavor, not as a political effort but members of my commute asked me to be mayor and to me was a great opportunity for civic leader to be involved in a community that was going, undergoing a needed to go under more transformation. one of the things that i did while i was mayor was to build an industrial site and have been interchange built into it and when i became a senator one of the first calls i made was the volkswagen to try to encourage them to come to chattanooga. ..

this time they sell the agreement that said that only they could be inside the plan on company time talking to employees. only they could have space within the planned. they tell the grand also said that volkswagen executives could not voice any opposition whatsoever to the uaw. with that in mind and with the quickie election call a think you know that with after two years of car check activity equity election was called and votes were to take place.

obviously i became involved. i knew that we were already a experiencing difficulties in our state in recruiting businesses to our state and especially to southeast tennessee because of the discussions. many people did not realize this, but there are companies that justin not want to locate next to a uaw organizing facility. i care deeply about our community. it is something that at 11 has gone through tremendous change and transformation. i look forward to going home every weekend. so one of the things that has not been reported that the uaw has been spreading rumors that the only way i knew was going to come to the plan and double its size, the only way that was going to happen was if the plant was organized by the uaw. obviously that was having an effect on people who work there.

and so on wednesday night during the course of a 3-day election after about 1,000 votes of 1300 had been cast and made this statement and i was assured that even if the uaw did not win the chattanooga was still exploits choice. i talked to collectors often. i believe -- i know that chattanooga is the first choice. so for some reason the uaw has jumped on that in its appealing. i think that -- i just want to say that in the event the national labor relations board were to somehow say that elected officials cannot voice opinions are voiced concerns of what they know, i think that is going to be a landmark assessment. so as you know, the uaw has appealed. we will be interesting to see a labor relations board reacts in case after case after case, a predominantly when democratic

senator seven voicing support for union organizers which they have ruled that in fact political leaders, public officials and the average into the fresh be -- for free speech. i hope that the uaw appeal with president obama weighing in on the same boat, if you remember, hoping that they would organize while voting was still taking place, i hope that the national labor relations board will understand and realize the magnitude of what they will be deciding and in no way will try to muzzle community leaders from expressing their point of view. with that you want to talk about ukraine's, whenever you wish to talk about. i am glad to do it. >> one of the things i like is that i no there are reporters around the table and know more about certain subjects that i. since we have certain people here to ask you about the uaw,

let me ask you about the ukraine . watching evens unfold their, putting a, you know, ground forces in western russia, additional things happening this morning, what is your view of what, if anything, the u.s. can do and your assessment so far of how the obama administration has reacted? >> we had the prime minister of georgia just the other day. we have a coffee with an -- with him the other day. i was the first -- yes. i was the first u.s. official to uh -- when russia came into georgia and the first official to go up to witness the bombings and what russia had done with

their tanks and other artillery. and what you see happening right now in the ukraine brings back those memories. there is concern. another have been reports that russia is printing of passports. if you remember, that is exactly what they did in georgia. they sent passports and to many of the russian oriented people there. over time they claim that they did not come into the country to protect people that had an affiliation with russia. and so, you know, you saw the exercises that were announced yesterday. obviously they have a very important naval base, very important naval base. and dominion know, i continue to be concerned that we will see a replay of what we saw in georgia because i think the interest there is more important to russia than was the case. so, you know, i will say there

was a briefing a couple of days ago. at think she is with what she has to work with doing an outstanding job. i really do. she is definitely leaning forward. the question will become again the west, the united kingdom and that yesterday's act quickly enough but also responsibly to deal with many of the financial issues that exist. obviously russia can do this much more quickly for lots of reasons. the question is, well we've react quickly enough. can we get the imf to reform process is moving along quickly enough that we feel comfortable with loan guarantees and the other kinds of things that the economy needs. in the interim, can we make those proclamations commission week shows strength in the region to try to deter russia from doing other things that are either soft partitioning of the

country are candidly doing something more aggressive militarily. what we don't want to do is raise tensions in the area. on the other hand, you know, one of our staffers suggested us announcing some new strategic relationship or doing something the shows the -- and i'm talking about militarily, doing something the shows that we have strong interest in the region, that we stand by their region. at the same time, what we don't want to do, i don't think, is to raise tension specifically in that area. i am concerned about what bruton is going to do. we had a tremendous sang the other day, and it is evident that this is a tremendous stress to him. for people inside russia to see what the citizens are doing is a threat to him. if ukraine moves to the west which we have had a good three or four days in that regard obviously it will shake russia's

future in a big way because no doubt the country will migrate more that way. if he is able to pull them back and some form or fashion, obviously at think that it pushes them back in the other direction. i hope that the president -- we were just talking about the things that our office needs to do to push the administration to really take a strong position near. you know, right now appears that the president really does not have a plan, not to be pejorative, but as so many other foreign policy crises, and seems that we are catching up and to dealing with events ad hoc as they move along. >> one last one from me and then we will go to dave share person, sean higgins, rosie gray. you were part of the bipartisan

bicameral group that discussed taxes. a plan this week. agreed with limited enthusiasm. we will not be able to finish the job. is the beginning of a conversation. >> not in that order. it is the beginning of a conversation. my question to you is is tax reform done for the year? >> that is a quick answer. >> a tremendous amount of work. he leads the chairmanship. i was at the first meeting. trying to reenact what happened years ago. we met in an irish pub to try to begin talking about tax reform. obviously it never went

anywhere. i think kemp has done something good candidly by laying out what he believes after many, many conversations with republicans and i might highlight democrats, what he thinks tax reform might well look like. i see no way that it will be dealt with this year. as a matter of fact, i see no way anything important will be dealt with this year other than i actually believe that there is more than a glimmer of hope that we're going to address gst reform. we have been working for a long time together with the administration to craft a bill, said bill 1217 to deal with housing finance reform. based on conversations we're having right now with the banking committee leaders i think we are getting to a place where we may have a markup in the very near future, and it is the one thing that on a bipartisan basis that actually has substance that i think we may well do this year, but tax

reform certainly is not going to happen this year. i don't think immigration is going to happen this year. obviously i would like to see both of them have been. acting pro-growth tax reform is something that our nation badly needs. i was glad to see a dynamic scoring, and. that is a huge step forward, and candidly it is a victory for our nation to actually be able to measure those kinds of things and account for those kinds of things. we aren't going to see tax reform happen this year in my opinion. >> questions. >> senator bob corker, they say you tried to intimidate workers. you try to negotiate a deal. can you respond?

>> i probably should have mentioned that in my opening comment. thank you. back in 2008, back when i was on the banking committee as the most junior member asset and the cameramen slap at the end of the deaths and was just dumbfounded one day. we have a hearing or we have that three -- the detroit three come in asking for $25 million. i don't know if you remember, but the end of the hearing one advantage to have the advantage you have is you can ask both questions. my question was how were you going to divide up the money. well, we will divided amongst ourselves. pretty interesting for three companies and the uaw to ask for 25 billion. we reconvene in three weeks because the answer was beyond belief. in that time i spent a tremendous amount of time with analysts in new york and other

places understanding these three companies and the uaw. i think you know that later on i ended up in pretty intense negotiations with chris dodd, the three detroit companies in one room and the uaw with us and the foreign relations business office again and multiple meetings with the uaw, multiple meetings with the big three. i became very aware of what the uaw interests were. it was not the company or companies it was solely their survival. and with that certainly when they came to chat and area and began doing what they're doing i had an inside, i felt like coming into what the uaw was about. as a matter of fact, bob king had been transparent about what his goals were. i don't know if i would have said these things, but he has publicly said that they cannot

survive as egg growing entity unless they're able to unionize the transplant. let me use that word. when they were meeting with me that in 2008 transplant was a pejorative term. looked down on these companies. there were not american companies. they did not employ americans even though gm has measured to the major plants in china and other places. they were different. i had in sites that were useful. obviously i wanted to share. was apparent that the uaw was in chattanooga for one reason, hours. the workers and already made more than workers in other plants for the same length of time. the plant is the most environmentally safe plant in the world, lead certified. there is nothing like it. so the workers realized that there was really nothing that the uaw could bring to them. by the way, they are the largest

shareholder one of the competitors, general motors, which is interesting, but the fact is those things came into play, my knowledge of the uaw came into play. let me tell you this, i think my involvement from their perspective, you know, i probably am public in a number one because if you think about what happened to allow whites are right. if you think about what happened , in the second banking hearing, sitting there with wagner and others, i wrote out those five what is now called the course of principles. and if you remember, hank paulson when the bush administration which was so ready to get out of town by january 20th and did not want a major company bankruptcy on their watch. there were looking for an end january 20th. they wanted that to come as quickly as possible.

the bush administration near christmas the extended the 25 billion in credit but but the corker principles as part of that. paulson called me up morning. the president called me up morning. fortunately obama capp's those principles and place. if you remember, when emanuel first came into office many would go up and meet with him at the white house. we are falling as principals. he embodied those. the end of the day they forced the uaw to be competitive with the transplant. i thought they did it in at very odd way. the fact is there has no doubt been pent-up anger as a result. >> senator, a diplomatic

negotiation on the syrian crisis has ground to a halt. problems will not be pushed to negotiate seriously until there is more pressure on the ground. to use the u.s. -- >> you know, that was happening, by the way, at the same general time that these negotiations are taking place in geneva. i know he shared this with other senators. look, we are looking at something that is going to change the balance on the ground you know, we continue to ask what that might be. i think you remember probably that foreign relations committee thankfully pass something out on a very strong growth. 15-32 way back when it would have mattered to arm -- let me

underline that to much of our and trained the vetted moderate rebel groups. at that time, as you remember, a dress was the person that we were casting our lot behind. for some reason -- and by the way i think you have seen public announcements by the administration. they said something is really about covert activity that i don't think i ever heard people announced before. it is an unusual way of knowing about foreign-policy, but the fact is that nothing of significance has really ever occurred. i have been the camps, on the border of syria. obviously i was there prior to the conflict. i have been to the camps enough to wear actually recognize and know some of the refugees who were there. on several occasions i have told them that help is on the way. our country is going to arm the

moderate rebels and continue wars strongly humanitarian effort. those things just have not occurred. obviously this thing is now in a very different place. i think that we need to continue to look at what that might mean. i think when our -- what we might do in that regard, i am very disappointed in the administration. their still getting killed. and i don't know whether something to demonstrate additional perrot bomb being dropped on citizens with nails and screws. this administration is very involved. passed out of the committee arming of the bennett moderate rebels. we thought that was actually going to happen. there has been an intense debate

whether that kind of activity should take place covertly for whether it needs to take place under title ten through the defense department. that debate never came to a head. nothing has ever happened. again, to me, things are much more dire. we are in a much worse place. you know, there is no way i see him coming to geneva where he thinks he is winning to negotiate himself out of office. i just on see that happening. i will tell you, i was just in saudi arabia and bahrain recently. as people watched what we did and in any place that i go in the world today, as they watched what we did, as they watched the president talk about the red line, as they watched us jump into the arms of syria, as they watched, you know, the foreign relations committee actually

pass, which i was proud to do, and authorization for the use of force, but as they watched as to the things that we have done to basically figure out how to be uninvolved in syria their questioning, where is america. what has happened to america. i know he is not handling the syrian file any more, but i arrived one night at 1130 and plans to begin meetings the next morning with a crown prince and others who. he had a plane waiting on the runway. he asked me to come by his palace. i met with him until 3:00 in the morning where he was totally and exasperated with the fact that they had expected a call when we were going to use military force never called, not our administration, to let them know that the plan had changed.

i could not be more disappointed i know that many people in the administration and disappointed with the fact that there has not been a coherent policy. is far more difficult to on the ground right now. i'll tell you, a deteriorating effect, not a good leader. the fact is that this is now a regional conflict where every single one of our intelligence officials tells you that this is now coming. this is a place where g how this fire concentrating. a place that over time will create the same kind of risk for our country like other places have done in the past.

[inaudible question] >> look. for months i have known that top management and volkswagen wanted to locate the suv linage in new york to go back and look at the speech at the detroit auto show, he said everything but that. so this has not been near news. the issue has been -- as a matter of fact at one point they had planned to even announce the fact that there were coming in advance of the union but taking place. i have known for some time that

chattanooga was their first choice. one of the interesting and yet i have also known that the state was they clearly stated was concerned about their incentive package and wanted to know if there would be a uaw plan or not. we have a laboratory, at two plants now, one is spring hill which has been anything but a success. the state was involved in helping it be there. right down the road we had a nissan facility. it has been a model facility. it continues to add jobs. as people look at the success of the two there were questions. candidly it was built to add

another line. it was built to double its size to make a productive. we were concerned that if something happened to change the balance for some reason states became this interested in putting incentives a play that it would ultimately go to mexico and over the next 15 year time frame this plant could cause itself to not be competitive anymore and the jobs we had could go away. saw. >> look, five years of involvement with a company like this from the very beginning until now you may not developing relationships, not just the people of pin down the line and

inside the company but also with those people like doing the site selection process, people involved in crisis management. i obviously am opposed to the uaw. at the most of you know i was a card-carrying union member myself. the company that i had that operated all of the country building shopping centers come my employee union carpenters and laborers. was a chesty. i am not anti-union. that job destruction that the uaw has been involved in coming down to just over 300,000 members from a million and half. i have seen the job destruction that is taking place. look, im -- i was very aware and have been for some time what

looks like in wants to do. i certainly was assured that the gist says the company said that the outcome of this load matters not relative to how our selection. i was assured that if the workers voted against the uaw they would still shoes in chattanooga. that is all clouded with the challenge is taking place in the future and things that have been said, but was aware that inside the plant the uaw was spreading word within the plant, they were the ones that were inside the plan. i am talking like and right now. i am not inside the plan. inside the plant there were efforts to scare the employees that if they did not vote for the uaw the plant was not coming there. we outside speaking free-speech

that that was not the case or assuring the workers that that was not the case. >> have only got about 20 minutes left. >> thank you. senator, going back to the train much attention has been given by the international quests to the release of former premier. there is considerable talk about her. others say that she was totally in competence while she was a premier beforehand would not be a good choice, obvious sympathy for her notwithstanding. we seem to be in a situation not unlike libya or iraq where we do not know what comes next. do you have any thoughts on this

or clues as to where we go from here? >> as to whether she will be the person or not i know that all of you reported that a response that she got when she visited was both good and bad. she was not overwhelmingly appreciated by a crowd. i don't know that i have the ability. that began the ability to speak to this issue passionately. i did, glad that i did, and am thrilled for my community and the workers for the outcome. on this issue the people of the ukraine will have to speak. if you look at the country massive structural problems, massive structural problems. yet the country really does not have the institution today to deal with those.

i think having another official, speaking by the way, directly to this person are this individual, but to have someone who comes in and does not have the mandate to change the nature of how the government there operates and to just returned to the other side during exact his same kind of thing is not spoiling to be something else will bode well for the country. energy sectors of the massive amount of corruption that takes place, those things have got to be dealt with. candidly one of the roles that the imf is best at playing has been that mechanism that helps force those changes without an outside 4825 forcing mechanism in this -- is on like the that the ukraine will be a will to --

it will take them strong, strong . >> the effort to attach the main veteran groups have come out against it. >> you know, i -- the senate to vote have been here seven years now. the senate has been on the verge of a death spiral for several months. when you have a leader -- and i said this directly. this is in his office.

when you have of the year that is totally banned on ensuring that there is no debate you will find people using all kinds of avenues to try to bring something to the floor for debate it is beyond belief. it is the greatest deliberative body you have friends and ellis side of the aisle of just as frustrated as many it's reprehensible. reprehensible away the united states and operates. i think most of vino that i have done everything i can to reach out. i spent an inordinate amount of time with the earlier this summer dealing with the nuclear

option very outspoken. a tremendous amount of time i decided myself on november the 20th win in this made up crisis came out if you look at the a executive calendar at that time, the leader could have moved through the executive calendar and of three weeks if you use the rules we already had what i finally decided that the seven years and candidly sometimes in the minority you have an opporunity to affect things more than if you are in the majority